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Governments face fallout from offshore accounts report

Published:Wednesday | April 6, 2016 | 12:00 AM
People gather to demonstrate against Iceland's prime minister in Reykjavik on Monday.


Governments around the world tried yesterday to contain the fallout from the publication of thousands of names of rich and powerful people who conducted offshore financial activity through a Panamanian law firm.

China dismissed as "groundless" reports that relatives of current and retired politicians, including President Xi Jinping, own offshore companies.

The state media are ignoring the reports, and search results for the words 'Panama documents' have been blocked on websites and social media.

Iceland's prime minister has resigned amid thousands of angry protesters demanding he step down and call new elections. The leaks showed possible links to an offshore company that could represent a serious conflict of interest.

And Ukraine's president was accused of abusing his office and tax evasion by moving his candy business offshore, possibly depriving the country of millions of dollars in taxes.

The reports are from a global group of news organisations working with the Washington-based International Consortium of Investigative Journalists. They have been processing the legal records from the Mossack Fonseca law firm that were first leaked to the German Sueddeutsche Zeitung newspaper.

Shell companies aren't by themselves illegal. People or companies might use them to reduce their tax bill legally, by benefiting from low tax rates in countries like Panama, the Cayman Islands and Bermuda. But the practice is frowned upon, particularly when used by politicians, who then face criticism for not contributing to their own countries' economies.